Letter Suggests SDNN to be Bought Out

I have received a copy of a letter allegedly sent to free lancers working for San Diego News Network yesterday (May 28) at 5:12 p.m. The letter purports to be from Nicole Rockstead, on behalf of Neil Senturia, head of SDNN. "SDNN is in discussions with potential buyers," the letter opens. "Effective June 1, we are suspending all agreements and stipends with our free lance contributors and writers so please do not do any work for SDNN until you hear from us. Should we be successful in our negotiations, we would hope that the final buyer would be interested in working with many of you...Barbara [Bry, Senturia's partner) and I appreciate all that you have done to help SDNN."

I have called and sent emails to SDNN free lancers but have not been able to reach anybody. However, I do not believe this letter I received is a hoax. Senturia's home phone is constantly busy this morning. Neither he nor others at SDNN have responded to emails.

Earlier, SDNN announced it had been successful in San Diego and had plans to expand to 40 markets. It raised more than $3 million from investors and planned an initial public offering. However, it just closed its Orange County operation, which had only been open a few months. Orange and Riverside counties were to be SDNN's national launching pads. If I finally get to Senturia or some of the other free lancers, I will add more.

Comments

SDNN IS OUT OF BUSINESS. I have done more reporting on the SDNN situation. It has laid off its salaried personnel, not just its free lancers. It has simply run out of money, say people who were with the organization. For awhile, it will keep a couple of people to maintain its website, but it is not clear what kind of material would run on it. The company recently launched a print publication for La Jolla and Del Mar with 20,000 circulation. There were two editions. The Los Angeles Times was to sell ads and print and distribute it. The Times may have pulled out. The new print publication is almost certainly dead, unless some rabbit is pulled out of a hat. The Times had also given SDNN office space for its Orange County online edition, which only lasted four months, closing down recently. It's possible that the L.A. Times pulled the plug in Orange County, but I haven't pinned that down yet.

William Yelles, former managing editor of the online SDNN, says that one year ago, in May of 2009, the founder, Neil Senturia, called Yelles to La Jolla and said the company was broke and would lay off everybody except Yelles and somebody on the advertising side. The next month, however, Gary Jacobs, son of the Qualcomm founder, put in some money. Yelles believes Jacobs put $500,000 in twice, and an Orange County investor put in at least $750,000. In fall of 2009, Senturia said the online operation in San Diego had exceeded expectations, and the company (the parent is named U.S. Local News Network) would expand to 40 markets. However, Yelles does not believe the company ever had a profitable month. Early this year, the company said it had raised $3.18 million from investors to be used for its expansion to the outlying markets. One source says that investors (besides Jacobs and the Orange County angel) put in $100,000 each. Senturia and his partner Barbara Bry are said to have contributed $140,000. (That is not pinned down.) U.S. Local News Network talked of an initial public offering.

Yelles says Senturia always hoped that the Tribune Co., which owns the L.A. Times, would buy the company after Tribune pulled out of bankruptcy. But that process has dragged on. There is a rumor that the Union-Tribune might buy SDNN, but that is not credible. There is another rumor that Senturia wanted to sell the company to Mike McKinnon, majority owner of KUSI. But McKinnon saw through it, and the bargaining finally got down to Senturia proposing to give the company to McKinnon. (That is also not pinned down. I have not talked to McKinnon. Senturia's home phone has been busy all day and he has not responded to emails. I have sent emails to others close to the operation, including Bry, and heard nothing.)

I reached Chris Jennewein, president of U.S. Local News Network, and he suggested I call Senturia. Then he hung up.

Response to post #5: A lot of them were ex-UT people. David Elliott, Arthur Salm and Valerie Scher are ex-UTers, and good. Margo Schwab has worked a number of places such as La Jolla Light (along with her own website) and brightened up the online publication. There aren't many journalism jobs out there. Best, Don Bauder

Response to post #6: Yes, and as I said above, your work for SDNN was quite good. What bothers me is that Senturia kept saying the online publication was doing well, and it's beginning to look like it never was doing well. There must be some unhappy investors. Best, Don Bauder

SDNN didn't exactly get off to a great start when the actual founder and visionary who created the concept, former SignOnSanDiego.com editor Ron James, apparently clashed with Mr. Senturia. Money talks and Mr. James was shoved out the door. A settlement agreement with Mr. James is rumored to have been reached before SDNN published a single article. Without Ron James' vision and ability to leverage his longstanding relationships, SDNN was seriously hampered. Mr. James' unceremonious ouster also angered a lot of his colleagues, who then refused to work for SDNN without him. Mr. Senturia's ill-conceived morning radio show further drained the venture of much-needed capital. It's a shame that we may be losing this platform for so many good writers; veterans Elliott and Salm, established writers like Caron Golden and Margo Schwab; and fresh voices like Sharna Langlais. At least Golden and Schwab publish independently... smart women.

Then I agree with comment #12, the vision was flawed from the outset. Local on-line news sites aren't like hot dog carts, you don't start out with one and then plan to open others. In this day and age, if you want to wind up with a successful National news site, then you start one, like thedailybeast.com did, and that's your model. If you want to own several successful local sites, then you invest in and purchase several local sites.

Response to post #12: I tried three times to reach Ron James today. He has apparently moved to Napa Valley but I could not locate him. He could shed light on this. If SDNN and/or its parent goes BK, I would imagine James will have to fight creditors for his buyout money. On the other hand, he may have it in hand already. He can always call me at 619-546-8529 or email at don.bauder@mac.com. I agree that the talent you named will be missed. Best, Don Bauder

Response to post #13: AOL has a local news operation called Patch that focuses on several cities and towns. It is expanding the number of towns rapidly, featuring local material. AOL is pouring money into it. Yahoo is trying to bolster its local coverage to battle Patch. So some fairly deep pockets are tossing money at the concept. Best, Don Bauder

@ #15: Yes, but AOL and Yahoo began with National coverage. What they are doing is simply reading users ISP's to determine their location and feeding them local news on a portion of their news links. Yahoo already does this for San Diego, featuring NEWS 8, VOSD, and SOSD as the sources. I have no idea if they are going to turn a profit on it, but I can see how it's useful, much as a portion of network television's advertising is set aside for local buyers and delivered accordingly.

Senturia's plan seems almost cock-eyed to me. Imagine starting a local independent television station with the idea of using revenue and investment to then start more local independent television stations. To what end, exactly? It is as though the tail is attempting to wag the dog.

In the last decade, local papers have imploded the concept of regional editions, it wasn't profitable.

Response to post #16: Senturia's assertion that he intended to set up outlets in 40 markets was not credible at the time. It looked like a Potemkin Village and certainly it looks more so now that we know more about the dire straits SDNN was in then. Some view the announcement as a ploy to lure in investors to rescue the day-to-day operation. And the parent company did bring in $3.18 million. Best, Don Bauder

Response to post #18: Yes, SDNN's likely demise (unless it can sell itself) is a blow to local journalists who had been wiped out in the UT pogroms. SDNN didn't pay much, but at least one got the ego massage of seeing one's byline again. Best, Don Bauder

Response to post #27: I can tell you who lost: outside investors. (Even if it's sold, which is doubtful in my opinion, I don't think investors will recover much if anything.) We may have to wait to find out whether or how much insiders reaped. Best, Don Bauder

ADMIN: Please please please change Don's thread avatar from a grey shadow to that pleasant looking fellow whose face beams upon us from the comments page. That way we can all sleep a little easier in our beds tonight. :)